Demand for aged care will only grow

This is welcome news, though it won’t clear the backlog. The wait list ballooned by more than 20,000 between March and July this year. There are currently 108,000 people on the waitlist, plus another 120,000 people waiting to be assessed.

A large and growing wait list is not just about the slow release of care packages. It also reflects the ageing of the Australian population.

The share of Australians 85 and older is projected to more than double by 2070, while the number of centenarians is projected to be six times higher than today. As a result, our demand for care services will keep rising.

To meet this growing demand, we will certainly need more home care packages, but we also need workers.

Jobs in care need to be attractive enough to draw people in, and to keep them in the industry. Yet care work has historically been underpaid and undervalued.

Low-paid and undervalued

Care workers have typically earned below-average wages, and less than other similarly skilled occupations. In part, this reflects the highly feminised nature of the work, and the persistent gender biases that have undervalued traditionally “feminine” skills.

Care work is also characterised by insecurity and poor workplace conditions. Casual work is more prevalent, at 28 per cent of direct care workers in aged care, compared to 20 per cent of the national workforce.

Career progression is limited, promotion rates are lower than the broader workforce average, and the work is physically and psychologically challenging.

Unsurprisingly, many workers are unhappy with their pay and conditions. Less than two in five workers in aged care are satisfied with their pay or promotion opportunities. They commonly report feeling burnt out and unsupported, which can lead to lower-quality care.

Pay boosts have been meaningful

There has been some progress in recent years toward tackling the chronic undervaluation of care work.

Wages have increased significantly, though from a very low base. The Fair Work Commission awarded aged care workers a 15 per cent pay rise in June 2023, concluding that their work had historically been undervalued.

Further increases of up to 13.5 per cent are taking effect in 2025 and 2026. In total, about 400,000 workers received a pay rise.

But more work is needed to improve conditions and career pathways. There has been some work to map career pathways to clarify the types of opportunities available, for current and prospective workers.

Governments and industry bodies could provide guidance and support to providers to implement clearer pathways, as in the UK.

Even without further increases, care is going to cost more

It will take time to determine whether these wage increases have been enough to tackle persistent workforce shortages. The final wage increases have not yet taken effect, and behavioural responses don’t happen overnight.

The government should formally evaluate the impact of the wage increases on the demand for and supply of workers in a few years’ time, when more data are available.

It may be the case that wages will need to rise further, if Australia still has chronic worker shortages.

We’ve already spent almost $9 billion on wage increases since 2023. Lifting aged care wages further to the median wage for similarly skilled workers, as an example, would cost roughly $3 billion a year upfront.

At the very least, care wages will need to keep pace with wage growth in the broader economy.

Who pays the bill?

Currently, the government funds 95 per cent of the cost of home care, and $3 out of every $4 spent on residential care. It also funded the recent wage increases.

Higher care costs mean higher taxes, additional debt, or spending cuts elsewhere in the budget. The first two options are ultimately paid for by current and future taxpayers.

The new Aged Care Act, scheduled to come into effect from November 2025, will require wealthier Australians to contribute more to the cost of their care.

But we need a mature discussion about whether this split is right.

Leaning too hard on users would be disastrous if people miss out on the care they need.

But leaning too hard on taxpayers and future generations risks further straining the intergenerational bargain when it is already stretched.

The one certainty is that we cannot avoid investing in fair wages and good working conditions for the care workforce. It will be no use figuring out the perfect funding model, or clearing the waitlist for home care packages, if we have no workers willing to provide the care.